Objective

This study develops a comprehensive indicator to measure regional equality in Mexico's institutional and business performance, which are fundamental pillars of economic development.

Method

We adapt the United Nations methodology for gender equality measurement to construct a multidimensional index incorporating legal, regulatory, political, economic, and social variables spanning 2002-2021.

Results

The resulting temporal index effectively captures institutional and business performance variations across Mexican regions. Our analysis reveals a strong positive relationship between the index and regional development: regions with higher institutional and business quality consistently demonstrate superior income outcomes.

Limitations

The 20-year study period remains relatively constrained, and quantitative findings may vary depending on which variables are selected as core economic development pillars.

Main findings

Mexican states exhibit a gradual convergence toward equality in institutional and business performance, though this progress has been slow and experienced notable reversals beginning in 2018. The persistent heterogeneity in regional institutional and business system development constrains Mexico's overall economic development potential.

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